Santander Profit Dented by Restructuring Costs
July 27 2016 - 02:20AM
Dow Jones News
MADRID—Banco Santander SA said Wednesday that net profit fell in
the second quarter from a year earlier as one of Europe's largest
banks booked an anticipated restructuring charge due to branch
closures and employee layoffs.
Santander said net profit was €1.278 billion ($1.41 billion) in
the second quarter compared with €2.54 billion a year earlier.
Analysts had anticipated that lower lending income and the
restructuring charge would lead Santander to report a net profit of
€1.27 billion, according to a poll by data provider FactSet.
The Spanish lender, run by Executive Chairman Ana Botí n, said
net interest income in the second quarter was €7.57 billion
compared with €8.28 billion a year earlier.
Net interest income, a key profit driver for retail banks, is
the difference between what lenders pay clients for deposits and
charge for loans. Analysts had anticipated net interest income of
€7.73 billion, according to FactSet.
The consequences of Britons' vote to leave the European Union,
such as a drop in the pound, wasn't expected to take a major toll
on Santander in the second quarter. Investors expect Brexit to slow
Britain's economy and lessen the revenue Santander generates in its
U.K. unit in coming quarters.
Santander had warned investors that it would book a roughly €500
million charge in the second quarter triggered by the closure of
around 450 bank branches in Spain and the layoffs or reassignments
of around 1,380 employees. Santander said at the end of June that
those restructuring costs would be offset in part by the sale of a
stake it holds in Visa.
Spain has among the greatest number of bank branches per person
in Europe, and it is common for small, rural towns in the country
to have several branches. Santander and other Spanish banks are on
the hunt for revenue, and they are starting to cull their bank
branches, which can be expensive to maintain.
Write to Jeannette Neumann at jeannette.neumann@wsj.com
(END) Dow Jones Newswires
July 27, 2016 02:05 ET (06:05 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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